CMS pre­scribes pay­ment fix to re­sus­ci­tate US an­tibi­ot­ic in­dus­try

As the UK ex­per­i­ments with a sub­scrip­tion-style pay­ment sys­tem to re­sus­ci­tate the fledg­ling an­tibi­ot­ic in­dus­try — in the Unit­ed States, the Cen­ters for Medicare & Med­ic­aid Ser­vices (CMS) is work­ing on re­struc­tur­ing the pay­ment ap­pa­ra­tus for new an­tibi­otics to re­vi­tal­ize an­timi­cro­bial de­vel­op­ment and res­cue ex­ist­ing man­u­fac­tur­ers.

For one of the biggest threats to glob­al health, the li­on’s share of an­tibi­ot­ic de­vel­op­ment is tak­ing place in a hand­ful of labs of small bio­phar­ma com­pa­nies as a ma­jor­i­ty of their larg­er coun­ter­parts fo­cus on more lu­cra­tive en­deav­ors. In re­cent months, a hand­ful of an­tibi­ot­ic de­vel­op­ers — in­clud­ing Achao­gen and Tetraphase — have seen their val­ue go up in smoke as fee­ble sales frus­trate growth.

It is no se­cret that the in­dus­try play­ers con­tribut­ing to the ar­se­nal of an­timi­cro­bials are fast dwin­dling. Drug­mak­ers are en­ticed by green­er pas­tures, com­pared to the long, ar­du­ous and ex­pen­sive path to an­tibi­ot­ic ap­proval that of­fers lit­tle fi­nan­cial gain as treat­ments must be priced cheap­ly, and of­ten lose po­ten­cy over time as mi­crobes grow re­sis­tant to them. Con­se­quent­ly, there have been no new class of an­tibi­otics ap­proved since the 1980s — and to­day, rough­ly 700,000 deaths an­nu­al­ly are at­trib­uted to drug-re­sis­tant bac­te­ria, ac­cord­ing to the WHO.

Medicare ben­e­fi­cia­ries ac­count for the ma­jor­i­ty of both new an­timi­cro­bial re­sis­tance (AMR) cas­es and fa­tal­i­ties in the Unit­ed States, CMS ad­min­is­tra­tor Seema Ver­ma not­ed in the jour­nal Health Af­fairs on Fri­day.

In the Unit­ed States, in­cen­tives are al­ready in place to push drug­mak­ers to de­vel­op an­tibi­otics, such as fund­ing sup­port through the Bio­med­ical Ad­vanced Re­search and De­vel­op­ment Au­thor­i­ty (BAR­DA) and reg­u­la­to­ry re­forms such as the Lim­it­ed Pop­u­la­tion Path­way for An­tibac­te­r­i­al and An­ti­fun­gal Drugs (LPAD)  — but the in­dus­try is clam­or­ing for the pas­sage of “pull in­cen­tives,” or pol­i­cy mea­sures to in­crease the val­ue of a mar­ket­ed an­tibi­ot­ic by re­ward­ing drug­mak­ers on­ly af­ter their an­tibi­ot­ic is ap­proved.

Ex­ist­ing in­cen­tives, “while well-in­ten­tioned…ap­pear to have been in­suf­fi­cient, as they fo­cused ex­clu­sive­ly on bol­ster­ing the de­vel­op­ment pipeline with­out re­mov­ing the block­age cre­at­ed by is­sues with pay­ment,” Ver­ma con­ced­ed.

To rem­e­dy the ex­ist­ing set of “mis­aligned in­cen­tives,” the CMS has fi­nal­ized new rules to re­form an­tibi­ot­ic pay­ments from 2020.

Un­der the cur­rent sys­tem, hos­pi­tals bun­dle to­geth­er the costs of all the ser­vices for a giv­en di­ag­no­sis in­to what is called a di­ag­no­sis-re­lat­ed group (DRG). Con­gress im­ple­ment­ed the DRG sys­tem in 1983 to con­trol hos­pi­tal re­im­burse­ments by re­plac­ing ret­ro­spec­tive pay­ments with prospec­tive pay­ments for hos­pi­tal charges. The CMS as­signs each DRG a weight, which in con­junc­tion with hos­pi­tal-spe­cif­ic da­ta, is used to de­ter­mine re­im­burse­ment.

This sys­tem tends to in­cen­tivize hos­pi­tals to pre­scribe cheap­er, gener­ic an­tibi­otics that are not en­gi­neered to tack­le drug-re­sis­tant in­fec­tions. “This, cou­pled with the com­par­a­tive­ly low­er rev­enue ceil­ing for an­tibi­otics due to their low pre­scrip­tion vol­umes, has caused new an­tibi­otics to be­come en­dan­gered in­no­va­tions,” she wrote.

CMS is, there­fore, chang­ing the sever­i­ty lev­el des­ig­na­tion from non-CC to CC for codes spec­i­fy­ing AMR — the “CC” des­ig­na­tion in­di­cates the pres­ence of a com­pli­ca­tion or co­mor­bid­i­ty in a giv­en in­pa­tient case that re­quires the hos­pi­tal to ded­i­cate more re­sources for the care of that pa­tient than typ­i­cal­ly re­quired for the spe­cif­ic di­ag­no­sis. Clas­si­fy­ing drug re­sis­tance in this way will com­pel high­er pay­ments to hos­pi­tals treat­ing pa­tients with AMR, craft­ing a path­way for doc­tors to pre­scribe ap­pro­pri­ate new an­tibi­otics with­out dis­rupt­ing hos­pi­tal bud­gets. CMS will al­so con­tin­ue to “ex­plore whether ad­di­tion­al re­forms are need­ed to re­cal­i­brate DRGs to bet­ter ac­count for the clin­i­cal com­plex­i­ty of drug re­sis­tance,” Ver­ma said.

An­oth­er mea­sure be­ing tak­en by the CMS is to amend the New Tech­nol­o­gy Add-On Pay­ments (NTAPs) sys­tem as it re­lates to AMR, which is “unique­ly di­min­ished for an­tibi­otics.” NTAP was cre­at­ed in 2000 as a “time-lim­it­ed en­hanced pay­ment for new drugs or de­vices” to smooth the en­try for fresh prod­ucts while pro­vid­ing time for the rel­e­vant DRG to re­cal­i­brate to ac­com­mo­date pay­ment for new prod­ucts. “How­ev­er, stake­hold­er feed­back near­ly two decades lat­er sug­gests that im­ple­men­ta­tion of the NTAP through rule­mak­ing by CMS — both in terms of el­i­gi­bil­i­ty cri­te­ria and pay­ment — is in­suf­fi­cient to sup­port in­no­va­tion for an­tibi­otics,” Ver­ma ac­knowl­edged.

This is part­ly due to the fact that an­tibi­ot­ic de­vel­op­ers strug­gle to meet the agency’s “sub­stan­tial clin­i­cal im­prove­ment” cri­te­ria as they are tra­di­tion­al­ly giv­en the green light by the FDA on the ba­sis of tri­als that show their prod­ucts are non-in­fe­ri­or to ex­ist­ing an­tibi­otics. “(H)alf of pre­vi­ous an­tibi­ot­ic ap­pli­ca­tions for NTAPs have been re­ject­ed be­cause of a fail­ure to sat­is­fy this spe­cif­ic cri­te­ri­on,” Ver­ma said.

An­oth­er is­sue is that the pay­ment lev­el for the NTAP is set at 50% of ei­ther the cost of the new prod­uct or the dif­fer­ence be­tween the DRG pay­ment and the to­tal cov­ered cost of the par­tic­u­lar case. How­ev­er, this thresh­old is in­suf­fi­cient to in­cen­tivize hos­pi­tals to file for an NTAP pay­ment due to the low an­tibi­ot­ic pre­scrip­tion vol­umes for re­sis­tant in­fec­tions.

To rem­e­dy these struc­tur­al chal­lenges, the CMS — the Unit­ed States’ largest pay­er — has fi­nal­ized an al­ter­na­tive NTAP path­way that does not in­clude the SCI cri­te­ria and in­creas­es the NTAP from 75% from 50% for new an­tibi­otics that have been grant­ed as Qual­i­fied In­fec­tious Dis­ease Prod­uct (QIDP) sta­tus.

Last year, for­mer FDA com­mis­sion­er Scott Got­tlieb sug­gest­ed a “li­cens­ing mod­el” in which acute care in­sti­tu­tions that pre­scribe an­timi­cro­bial med­i­cines would pay a fixed li­cens­ing fee for ac­cess to these drugs, grant­i­ng them the right to use a cer­tain num­ber of an­nu­al dos­es.

BY­OD Best Prac­tices: How Mo­bile De­vice Strat­e­gy Leads to More Pa­tient-Cen­tric Clin­i­cal Tri­als

Some of the most time- and cost-consuming components of clinical research center on gathering, analyzing, and reporting data. To improve efficiency, many clinical trial sponsors have shifted to electronic clinical outcome assessments (eCOA), including electronic patient-reported outcome (ePRO) tools.

In most cases, patients enter data using apps installed on provisioned devices. At a time when 81% of Americans own a smartphone, why not use the device they rely on every day?

Chris Gibson (Photo By Vaughn Ridley/Sportsfile for Web Summit via Getty Images)

Re­cur­sion founders gin for­tunes as IPO back­ers show­er $436M on one of the biggest boasts in AI -- based on some very small deals

In the AI drug development world, boasting often comes with the territory. Yet few can rival Recursion when it comes to claiming the lead role in what company execs like to call the industrialization of drug development, with promises of continued exponential growth in the number of drugs it has in the pipeline.

On Friday, the Salt Lake City-based biotech translated its unicorn-sized boasts into a killer IPO, pricing more than 24 million shares at the high end of its range and bringing in $436 million — with a large chunk of that promised by some deep-pocket backers.

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Image: Shutterstock

Eli Lil­ly asks FDA to re­voke EUA for Covid-19 treat­ment

Eli Lilly on Friday requested that the FDA revoke the emergency authorization for its Covid-19 drug bamlanivimab, which is no longer as effective as a combo therapy because of a rise in coronavirus variants across the US.

“With the growing prevalence of variants in the U.S. that bamlanivimab alone may not fully neutralize, and with sufficient supply of etesevimab, we believe now is the right time to complete our planned transition and focus on the administration of these two neutralizing antibodies together,” Daniel Skovronsky, Lilly’s CSO, said in a statement.

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Covid-19 vac­cine halt drags on, an FDA ap­point­ment at long last, the great CRO con­sol­i­da­tion, and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

Conference season is upon us, and while we’d much prefer to be wandering down the hallways and presentation rooms in person, the team is ready to cover the most consequential data coming out of these scientific meetings. Get in touch early if you have news to share.

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Ex­clu­sive in­ter­view: Pe­ter Marks on why full Covid-19 vac­cine ap­provals could be just months away

Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research, took time out of his busy schedule last Friday to discuss with Endpoints News all things related to his work regulating vaccines and the pandemic.

Marks, who quietly coined the name “Operation Warp Speed” before deciding to stick with his work regulating vaccines at the FDA rather than join the Trump-era program, has been the face of vaccine regulation for the FDA throughout the pandemic, and is usually spotted in Zoom meetings seated in front of his wife’s paintings.

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Near­ly a year af­ter Au­den­tes' gene ther­a­py deaths, the tri­al con­tin­ues. What hap­pened re­mains a mys­tery

Natalie Holles was five months into her tenure as Audentes CEO and working to smooth out a $3 billion merger when the world crashed in.

Holles and her team received word on the morning of May 5 that, hours before, a patient died in a trial for their lead gene therapy. They went into triage mode, alerting the FDA, calling trial investigators to begin to understand what happened, and, the next day, writing a letter to alert the patient community so they would be the first to know. “We wanted to be as forthright and transparent as possible,” Holles told me late last month.

The brief letter noted two other patients also suffered severe reactions after receiving a high dose of the therapy and were undergoing treatment. One died a month and a half later, at which point news of the deaths became public, jolting an emergent gene therapy field and raising questions about the safety of the high doses Audentes and others were now using. The third patient died in August.

“It was deeply saddening,” Holles said. “But I was — we were — resolute and determined to understand what happened and learn from it and get back on track.”

Eleven months have now passed since the first death and the therapy, a potential cure for a rare and fatal muscle-wasting disease called X-linked myotubular myopathy, is back on track, the FDA having cleared the company to resume dosing at a lower level. Audentes itself is no more; last month, Japanese pharma giant Astellas announced it had completed working out the kinks of the $3 billion merger and had restructured and rebranded the subsidiary as Astellas Gene Therapies. Holles, having successfully steered both efforts, departed.

Still, questions about precisely what led to the deaths of the 3 boys still linger. Trial investigators released key details about the case last August and December, pointing to a biological landmine that Audentes could not have seen coming — a moment of profound medical misfortune. In an emerging field that’s promised cures for devastating diseases but also seen its share of safety setbacks, the cases provided a cautionary tale.

Audentes “contributed in a positive way by giving a painful but important example for others to look at and learn from,” Terry Flotte, dean of the UMass School of Medicine and editor of the journal Human Gene Therapy, told me. “I can’t see anything they did wrong.”

Yet some researchers say they’re still waiting on Astellas to release more data. The company has yet to publish a full paper detailing what happened, nor have they indicated that they will. In the meantime, it remains unclear what triggered the events and how to prevent them in the future.

“Since Audentes was the first one and we don’t have additional information, we’re kind of in a holding pattern, flying around, waiting to figure out how to land our vehicles,” said Jude Samulski, professor of pharmacology at UNC’s Gene Therapy Center and CSO of the gene therapy biotech AskBio, now a subsidiary of Bayer.

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J&J faces CDC ad­vi­so­ry com­mit­tee again next week to weigh Covid-19 vac­cine risks

The CDC’s Advisory Committee on Immunization Practices punted earlier this week on deciding whether or not to recommend lifting a pause on the administration of J&J’s Covid-19 vaccine, but the committee will meet again in an emergency session next Friday to discuss the safety issues further.

The timing of the meeting likely means that the J&J vaccine will not return to the US market before the end of next week as the FDA looks to work hand-in-hand with the CDC to ensure the benefits of the vaccine still outweigh the risks for all age groups.

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Osman Kibar (Samumed, now Biosplice)

Os­man Kibar lays down his hand at Sa­mumed, step­ping away from CEO role as his once-her­ald­ed an­ti-ag­ing biotech re­brands

Samumed made quite the entrance back in 2016, when it launched with some anti-aging programs and a whopping $12 billion valuation. That level of fanfare was nowhere to be found on Thursday, when the company added another $120 million to its coffers and quietly changed its name to Biosplice Therapeutics.

Why the sudden rebrand?

“We did that for obvious reasons,” CFO and CBO Erich Horsley told Endpoints News. “The name Biosplice echoes our science much more than Samumed does.”

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Pascal Soriot (AstraZeneca via YouTube)

Af­ter be­ing goad­ed to sell the com­pa­ny, Alex­ion's CEO set some am­bi­tious new goals for in­vestors. Then Pas­cal So­ri­ot came call­ing

Back in the spring of 2020, Alexion $ALXN CEO Ludwig Hantson was under considerable pressure to perform and had been for months. Elliott Advisers had been applying some high public heat on the biotech’s numbers. And in reaching out to some major stockholders, one thread of advice came through loud and clear: Sell the company or do something dramatic to change the narrative.

In the words of the rather dry SEC filing that offers a detailed backgrounder on the buyout deal, Alexion stated: ‘During the summer and fall of 2020, Alexion also continued to engage with its stockholders, and in these interactions, several stockholders encouraged the company to explore strategic alternatives.’

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